January 11th, 2012

The CEO of one of Decatur, Illinois’ largest private employers, Archer Daniels Midland, said Wednesday the agribusiness giant would be cutting 1,000 jobs, about three percent of its overall workforce.

The company employs about 4,500 people in Decatur. The job cuts mean that about 15 percent of the company’s global corporate staff will be laid off, the AP reported.

Many of the job cuts will come from salaried, rather than hourly workers, ADM said in a statement, adding it plans to offer voluntary early retirement incentives to help achieve the cuts.

“To ensure that we can continue to compete effectively in our global markets, we are taking actions to streamline our organization and achieve significant, sustained cost reductions,” ADM”s Chairman and CEO, Patricia Woertz, said in the statement. “These actions will help us enhance our productivity and earnings power.”

Bloomberg reports ADM’s cuts come on the heels of Cargill announcing an 88 percent drop in profit for its fiscal second quarter.

When I was last in Decatur this summer, I reported on ADM’s optimism about the agribusiness and how much it means to Decatur, including plans to take over some downtown office development. I’ve reached out to both ADM and some Decatur officials for some more information – will update if I hear back.

UPDATE: ADM’s David Weintraub tells me that the company doesn’t yet have specific numbers for how many layoffs will occur in Decatur. Employees have until Jan. 31 to submit voluntary retirement packages, and that will then determine how many Decatur employees will be let go.

He also says ADM will decide at that point whether to go ahead with the move into the Reynolds building downtown.

“Right now, our plans haven’t changed,” he said. Once we’re done with this and we see what the organization looks like we’ll determine how best we can use our facilities in Decatur.”

Weintraub added the cuts come in an “increasingly competitive global environment”, adding: “This is about improving our long-term productivity. It’s a tough but necessary decision we have to make.”

Decatur City Manager Ryan McGrady said while the city is obviously not happy to hear any news about jobs cuts, they still feel that ADM remains “committed” to Decatur.

“We’re going to do whatever we can to help them,” he said, adding that the company’s production side – ADM has one of its largest processing facilities in Decatur – isn’t been affected.

McGrady added that other large employers in Decatur – especially Caterpillar – are up above pre-recession employment levels. Caterpillar, in particular, he noted, has committed to a $500 million investment in its Decatur operations.

And one of Decatur’s oldest agribusinesses – the former Staley Company, now Tate & Lyle, had planned to move some of its operations north of Chicago to Hoffman Estates. That number is now only about 80 jobs, McGrady said.

January 11th, 2012

The Right to Work law debate is in the national news — Republican presidential frontrunner Mitt Romney insists it would be good for the country — and it’s a big topic right here in the Great Lakes, too.

Right to Work laws mean employees can’t be required to pay union dues, even if a union is formed in their workplace. There are 22 states around the country with Right to Work laws, many in the South, but there are none in the Great Lakes states, which have long been union strong holds.

On Tuesday, the governors in Michigan and Indiana, who’ve faced off in the past, weighed in on the subject with sharply differing views. Michigan’s Republican governor, Rick Snyder, said passing a Right to Work law is not a priority for him this year, even though some lawmakers say they plan to push for it.

Michigan Gov. Rick Snyder

Rick Pluta, at our partner station Michigan Radio, reports Snyder says a Right to Work debate would distract the state from the repair work it needs to do on the economy.

“…to get into a very divisive debate like that, you create an environment where not much gets done and I would point to Wisconsin, I’d point to Ohio. If you look at Indiana, that’s kind of consuming all the dialogue in that state,” Snyder said at the North American International Auto Show in Detroit.

In Indiana, Democratic lawmakers have refused to let the legislature consider the Right to Work law that Republican Gov. Mitch Daniels proposed last month.

Indiana Gov. Mitch Daniels

Daniels previously had resisted the same efforts Snyder faces. But in his state of the state address, Daniels said,

“Everyone knows that, among the minority favoring the status quo, passion on this issue is strong, and I respect that. I did not come lightly, or quickly, to the stance I take now. If this proposal limited in any way the right to organize, I would not support it. But we just cannot go on missing out on the middle class jobs our state needs, just because of this one issue.”

Daniels faced protestors during his speech, who shouted, “kill the bill” and marched outside the state capitol rotunda.

Where do you stand on Right to Work? Do our Great Lakes states need it to be competitive?

January 11th, 2012

The numbers from manufacturing are looking good, I reported last week. Bill Strauss from the Federal Reserve Bank of Chicago told me that of the 2.3 million manufacturing jobs lost in the recession, at least 300,000 of those jobs have come back. That’s about 13 percent – and where we left off last week. Today, we look at why employers say it’s hard to find those skilled workers. I started in Greenville, Michigan.

Dan Spohn found a new job within two weeks of being laid off last November. (Sarah Alvarez)

In 2008, Dan Spohn was laid off from his West Michigan manufacturing job. It took him six months of effort: going online every day, knocking on doors, passing out resumes, before he found new work. He said at that point, trying to even land an interview was “almost non existent”.

“I think people were in a mode of wait and see,” said Spohn, who has had 22 years of experience, including management, in the quality control side of manufacturing. Spohn ended up leaving the automotive sector where he had worked and moved into medical parts manufacturing. He figured that was a safer bet. But in November, that company downsized, and he was out of work again. But this time, it was a lot easier – within a week of being laid off, he’s had two interviews and two offers.

“Within two weeks of that, I was starting a new job,” said Spohn.

From Spohn’s perspective, the labor market has really loosened up. He’s not alone.

“It seems like everybody we talk to, they are starving for skilled workers, they need people with good skills,” said Tom Crampton, an executive dean at Mott Community College in Flint, Michigan. Crampton focuses on manufacturing training – and he said expectations for today’s manufacturing worker are higher than they used to be.

Community colleges says welding is one of the in-demand manufacturing jobs right now (Niala Boodhoo)

“They want them to be good communicators, good problem solvers as well as having high end technical skills,” he said, especially in machining, welding, design and what he called “mechatronics” – people who can work with both mechanical and electrical components.

State and federal governments devote millions of dollars to helping unemployed workers get retrained – in Michigan, for example, the overall retraining budget is about $640 million this year.

Some of that goes to paying tuition at local community colleges. Across the Midwest, colleges say they are seeing vocational course fill up as the hiring need deepens.

Inside a welding lab at Richland Community College in Decatur, Illinois, Instructor Leo Suhre is keeping a careful eye on students learning to cut and weld metal.

Last year, the school only had enough shop space for 12 students in each welding class. When those slots were taken, the college began offering an additional section at midnight.

“We ran that first the spring, and it started filling up, we ran it again in the summer – there’s a demand there,” said Douglas Brauer, a vice-president at Richland.

Enrollment for this course has increased 20 percent, and the midnight classes are now a regular fixture. Brauer said they’re especially popular with workers coming off second and third shifts at Caterpillar, one of Decatur’s largest employers. Now, the college is thinking about offering not just welding certification, but degree completion courses at midnight.

It’s also just authorized the building of a new workplace training center that will more allow it to more than double the size of its vocational classes.

Nationally, the jobless rate within manufacturing has dropped from a high of 13 percent in January 2010 to just under 8 percent.

One of the greatest needs is for machinists – specially, computerized numerical control – or CNC – operators.

“CNC machinists are red hot right now,” Daley College’s Ray Prendergast. Daley College has had a 137 percent enrollment increase between the fall of 2010 and 2011. Often, Prendergast said, his students are getting employment offers even before they graduate. At Humboldt College, the placement rate for jobs is 100 percent, he said.

In Skokie, Illinois, Symbol Job Training is a for-profit school that focuses solely on training machinists in CNC machinery, the standard on factory floors these days.

Student John Zawojski is a few months into the program. He had worked in warehousing for years, but got laid off, and hasn’t been able to find the same pay rates he used to get. He’s hoping that a CNC certification will change that.

Zawojski hadn’t heard of machining until the employment office told him it could be a good career – and said it would pay his tuition.

“I had no idea how to do any of this,” he told me as he punched codes into the control pad. “Now, I’m pretty good at it. I can actually make parts.”

Back in Flint, Crampton, from Mott Community College, says the conventional wisdom is that there aren’t any manufacturing jobs. The real problem, according to Crampton, is that there are pipeline issues: not just meeting today’s demand, but tomorrow’s, too.

January 9th, 2012

Honda made history in 1990 when it introduced the high powered Acura NS-X sports car. But it discontinued it in 2005 to focus on more fuel efficient models.

Now, NS-X is coming back. And instead of Japan, where it built the original car, it will build it in Ohio.

Honda made the announcement this afternoon at the North American International Auto Show in Detroit. It showed a concept version of the NS-X unveiled by its CEO, Takanobu Ito.

The next version of NS-X will be introduced in about three years, said Ito, who was part of its original development team. This version will be available as a hybrid, he said.

Honda will engineer it in Marysville, Ohio, at its sprawling North American technical center. It also plans to build it in central Ohio at a new manufacturing facility for the car, said a Honda spokesman, Ed Miller.

He would not say where the facility would be or how many jobs it would create, but said the car won’t be made on an existing assembly line.

Honda has car plants in Marysville and East Liberty, Ohio, and an engine plant in Anna.

January 5th, 2012

Our mission at Changing Gears is to report the economic transformation of the industrial Midwest, through the stories of people driving and experiencing this change.

Recently, our stations aired an hour-long encore presentation of our favorite series from the fall, as well as other stories from throughout 2011.

Have you ever wondered if small business really plays an important role in job creation? Or why our region seems to focus so much on one magic thing that will save the entire economy? And, have you wondered what will become of all the thousands of the empty houses and factories that litter our region?

We also went to a few factory floors to see what manufacturing is like these days – including one place where the machines continue to work at night, unattended, long after the human workers punch out.

We hope that these stories – about the Magic Bullets that are supposed to save our economy, innovative ways people are filling Empty Places, and what the modern factory looks like, help fulfill our mission.

Our partners at WBEZ are featuring our special on their site. You can check it out here.

January 5th, 2012

Depending on the analyst and the statistic, the Midwest economy is on the mend or still in trouble or somewhere in between.

Getting By, a year-end special from Changing Gears, went beyond the experts and numbers.

"Getting By" participants

Senior editor Micki Maynard and WBEZ’s Steve Edwards gathered at a dining room table with eight Illinois residents from different places and different points of view to discuss the economy’s real world impact on their lives.

We talked about how the recession is affecting everyone, from veterans to business owners, single mothers to people struggling to find work.

Listen to Getting By here and see more photos of the people who took part.

Many of our participants came to us through our PIN network, and we’re always looking for people who can lend their insight. If you’d like to become a source for us, click here.

January 4th, 2012

Chicago White Metal Casting's Factory Floor (Niala Boodhoo)

CHICAGO – The Midwest may have just 13 percent of the country’s population, but we still produces more than a third of the nation’s cars, steel and the lion’s share of heavy machinery. And, the rise in manufacturing meant good news for the Midwest economy last year. Here, a perspective on why things went so well for manufacturers last year – and what challenges lie ahead.

Just before you get to the factory floor of Chicago White Metal Casting, there’s a grainy, mural-sized picture of what the floor used to look like in the 1930s, when the business started by CEO Eric Treiber’s grandfather.

Back then, it was on the second floor of Chicago’s Fulton Street Fish Market. Today, the family-owned company operates further north of the city, just west of O’Hare International Airport. Chicago White Metal makes aluminum, zinc and magnesium die casting for a variety of industries, from automotive sector to health care. Die casting involves creating small metal parts – in this case, everything from the rearview mirror mount for cars to components for inside a MRI machine or a tractor.

Eric Treiber is the CEO of Chicago White Metal Casting, a business that was first started by his grandfather. (Niala Boodhoo)

Treiber said he’s happy that 2011 was brought much more stability for the company. With revenue growth of about four percent, it’s an improvement over 2010.

As measured by the Chicago Fed, Midwest manufacturing output has had 28 months of growth – at an annualized rate of six percent. That’s much better than the rest of the economy.

But there are a few caveats about these good manufacturing numbers. Strauss likes to use a tennis ball as an analogy, helping to explain that the growth numbers look so good because things were so bad before. In other words, the ball bounced pretty low before it went back up.

Now, Strauss said we’re seeing “great demand” at manufacturers, especially for machinery made right here in the Midwest – and not just automobiles.

“Whether it’s from Caterpillar, Deere, or Case New Holland, they are doing extremely well, especially for Caterpillar with those heavy mining equipment that they sell,” Strauss said, adding that demand especially from Canada and Russia is very strong.

Heavy mining equipment – some of which weigh more than 1 million pounds – in turn requires a lot of steel. That helps that industry, too, Strauss said.

In all, Strauss says about 60 percent of the manufacturing output lost during the downturn has come back.

So why don’t the job numbers add up?

One out of every four jobs lost during the recession was in manufacturing – that’s 2.3 million jobs. As of last November, we’ve added back just 308,000 of those jobs.

Remember the mantra “produce more with less?”. Many manufacturers practically perfected that during this recession.

Take Chicago White Metal Casting. Trieber says it had to be focused on productivity in order to stay competitive with business that was moving out of the country. By focusing on training workers, improving machine efficiency and updating equipment, he estimates they’ve had a 29 percent productivity increase between 2008 and 2010. And Treiber is actually hiring. But he’s looking for a few people, such as die cast machinists, especially repair men.

And that, in a crux, is the labor market problem right now with manufacturing – the need is for workers who are much more skilled. So why can’t you hire back those 2 million people out of work?

Strauss said it seems that many of those 2 million people who worked in manufacturing lack the skills that employers now want. He’s also quite optimistic about the future of manufacturing this coming year – as long as there are workers.

I’ll be reporting more on the skills gap later. In the meantime, if you were one of those 2 million people who were laid off, what are you doing now? Feel free to weigh in the comments section.

December 23rd, 2011

Three stories making news across the Midwest today:

1. Detroit’s finances a long-term problem. In the past 45 years, the city of Detroit has recorded 19 budget surpluses and 26 budget deficits, according to the Detroit Free Press. Experts tell the newspaper the city’s debt is now so high that the city could default on unpaid bonds soon, a prelude to bankruptcy. State officials will begin a formal review of Detroit’s finances in January, which could lead to the appointment of an emergency manager. Gov. Rick Snyder said the city faces both a short-term cash-flow shortage and a longer-term structural deficit. “We can’t continue this process because Detroit has been in a financial crisis of some fashion for decades,” he tells the newspaper. “We need a long-term solution.”

2. 2011′s dubious housing distinction. The year 2011 will likely be the worst in history for new home sales. The Commerce Department said it expects the adjusted annual number to reach 315,000 by the close of this month, fewer than the 323,000 sold last year, the worst year on record dating to 1963. That’s less than half the 700,000 new homes economists tell the Associated Press are necessary to sustain a healthy market. The projection comes even as new-home sales rose 1.6 percent in November. December would need to mark its best monthly sales total in four years to avert the dubious finish.

3. Unemployment up in Chicago area. Chicago’s unemployment rate rose in November to 9.8 percent, according to the Chicago Sun-Times. The rate ticked upward one-tenth of a percentage point from 9.7 percent in October, and was up 0.9 percent year over year. The unemployment rate dropped in nine of Illinois’ 12 metro areas in November compared to 2010. Chicago’s rate remains slightly lower than the state’s overall 10.0 percent unemployment rate, which has remained nearly flat for three consecutive months. The state’s lowest unemployment rate was found in the Bloomington/Normal area, at 6.8 percent, according to the newspaper.

December 22nd, 2011

How much do employees in the U.S. manufacturing industry make compared to their counterparts in other countries?

A new study released by the U.S. Labor Department says Americans receive an average of $34.74 per hour, the 14th highest hourly compensation among countries measured. Norway topped the chart at $57.53 per hour, followed by Switzerland and Belgium.

Canada ranked one spot ahead of the United States, averaging $35.67 per hour. Mexico ranked 33rd among the 34 countries measured at $6.23.

China and India were notably absent from the list. The Bureau of Labor Statistics said there were data gaps and deviations from international standards that made it difficult to forge accurate measures of manufacturing wages and overall compensation.